O A
Notes to the Consolidated Financial Statements (continued)
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5 General accounting policies
General
(a) Basis of consolidation
Introduction Report of the Executive Board Report of the Supervisory Board
For the contracts that will be capitalised as per 1 January 2019, the estimated impact on the income
statement will be as follows:
Estimated
IFRS16
Income statement impact Remarks
Revenue
(52)
The decrease in revenue (income from
subleases) is fully offset by a decrease
in expenses on the head leases (relates
primarily to The Netherlands
and Belgium).
Excise tax expense
Net revenue
(52)
Other income
Raw materials, consumables and services
259
A decrease in raw materials, consumables
and services, as a result of the shift
of operating lease expenses to
depreciation and interest.
Personnel expenses
Amortisation, depreciation and
impairments
(186)
An increase in depreciation, amortisation
and impairments, as a result of
depreciation of the Right-of-Use Assets.
Total other expenses
73
Operating profit
21
Net finance expenses
(40)
An increase in net finance expenses
as a result of the unwinding of the
discount on lease liabilities and accretion
of interest on lease receivables.
Share of profit of associates and joint
ventures
Profit before income tax
(19)
Income tax expense
5
Profit
(14)
For the contracts that will be capitalised as per 1 January 2019, the impact on the cash flow statement is
estimated to be:
- An increase of €0.2 billion on cash flows from operating activities (and free operating cash flow) and a
corresponding decrease in cash flow from financing
- The impact on net cash flow will be neutral
Financial Statements
Sustainability Review
Heineken N.V. Annual Report 2018^ 69
Other Information
It is expected that the actual impact on the financial statements in 2019 will be different as a result of:
- The finalisation of the validation of completeness and accuracy of the identified contracts
- The finalisation of the identification of embedded leases
- New lease contracts to be entered into in 2019
Reconciliation of the off-balance sheet commitments with the estimated impact
As at 31 December 2018, HEINEKEN reports a total off-balance sheet commitment for leases of
€2.0 billion. The difference between the estimated opening balance sheet impact of €1.2 billion (lease
liabilities) and the off balance sheet commitments is primarily due to low value and short-term lease
commitments, which are not included in the lease liability, and the impact of discounting of future lease
payments. Refer to note 13.2 for more information of the off balance sheet commitments.
The accounting policies described in these consolidated financial statements have been applied
consistently to all periods presented in these consolidated financial statements.
The consolidated financial statements are prepared as a consolidation of the financial statements of
the Company and its subsidiaries. Subsidiaries are entities controlled by HEINEKEN. HEINEKEN controls
an entity when it has power over the investee, is exposed or has the right to variable returns from its
involvement with that entity and has the ability to affect those returns through its power over the entity.
Control is generally obtained by ownership of more than 50% of the voting rights.
The financial statements of subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control ceases. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted by HEINEKEN.
On consolidation, intra-HEINEKEN balances and transactions, and any unrealised gains and losses or
income and expenses arising from intra-HEINEKEN transactions, are eliminated. Unrealised gains arising
from transactions with associates and JVs (refer note 10.3) are eliminated against the investment to
the extent of HEINEKEN's interest in the investee. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence of impairment.
